Correlation Between Aerovate Therapeutics and AN2 Therapeutics

Can any of the company-specific risk be diversified away by investing in both Aerovate Therapeutics and AN2 Therapeutics at the same time? Although using a correlation coefficient on its own may not help to predict future stock returns, this module helps to understand the diversifiable risk of combining Aerovate Therapeutics and AN2 Therapeutics into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Aerovate Therapeutics and AN2 Therapeutics, you can compare the effects of market volatilities on Aerovate Therapeutics and AN2 Therapeutics and check how they will diversify away market risk if combined in the same portfolio for a given time horizon. You can also utilize pair trading strategies of matching a long position in Aerovate Therapeutics with a short position of AN2 Therapeutics. Check out your portfolio center. Please also check ongoing floating volatility patterns of Aerovate Therapeutics and AN2 Therapeutics.

Diversification Opportunities for Aerovate Therapeutics and AN2 Therapeutics

-0.4

Correlation Coefficient

Aerovate Therapeutics  AN2 Therapeutics

Very good diversification

The 3 months correlation between Aerovate and AN2 is -0.4. Overlapping area represents the amount of risk that can be diversified away by holding Aerovate Therapeutics and AN2 Therapeutics in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on AN2 Therapeutics and Aerovate Therapeutics is a relative statistical measure of the degree to which these equity instruments tend to move together. The correlation coefficient measures the extent to which returns on Aerovate Therapeutics are associated (or correlated) with AN2 Therapeutics. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of AN2 Therapeutics has no effect on the direction of Aerovate Therapeutics i.e., Aerovate Therapeutics and AN2 Therapeutics go up and down completely randomly.

Pair Corralation between Aerovate Therapeutics and AN2 Therapeutics

Given the investment horizon of 90 days Aerovate Therapeutics is expected to generate 2.2 times more return on investment than AN2 Therapeutics. However, Aerovate Therapeutics is 2.2 times more volatile than AN2 Therapeutics. It trades about 0.27 of its potential returns per unit of risk. AN2 Therapeutics is currently generating about -0.07 per unit of risk. If you would invest  191.00  in Aerovate Therapeutics on July 19, 2024 and sell it today you would earn a total of  41.00  from holding Aerovate Therapeutics or generate 21.47% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Very Weak
Accuracy	100.0%
Values	Daily Returns

Aerovate Therapeutics  vs.  AN2 Therapeutics

Aerovate Therapeutics

Risk-Adjusted Performance

12 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Aerovate Therapeutics are ranked lower than 12 (%) of all global equities and portfolios over the last 90 days. In spite of rather fragile basic indicators, Aerovate Therapeutics exhibited solid returns over the last few months and may actually be approaching a breakup point.

AN2 Therapeutics

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days AN2 Therapeutics has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of unsteady performance in the last few months, the Stock's basic indicators remain fairly strong which may send shares a bit higher in November 2024. The current disturbance may also be a sign of long term up-swing for the company investors.

Pair Trading with Aerovate Therapeutics and AN2 Therapeutics

The main advantage of trading using opposite Aerovate Therapeutics and AN2 Therapeutics positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Aerovate Therapeutics position performs unexpectedly, AN2 Therapeutics can make up some of the losses. Pair trading also minimizes risk from directional movements in the market. For example, if an entire industry or sector drops because of unexpected headlines, the short position in AN2 Therapeutics will offset losses from the drop in AN2 Therapeutics' long position.

The idea behind Aerovate Therapeutics and AN2 Therapeutics pairs trading is to make the combined position market-neutral, meaning the overall market's direction will not affect its win or loss (or potential downside or upside). This can be achieved by designing a pairs trade with two highly correlated stocks or equities that operate in a similar space or sector, making it possible to obtain profits through simple and relatively low-risk investment.

Check out your portfolio center.

Note that this page's information should be used as a complementary analysis to find the right mix of equity instruments to add to your existing portfolios or create a brand new portfolio. You can also try the Crypto Correlations module to use cryptocurrency correlation module to diversify your cryptocurrency portfolio across multiple coins.